Colorado PERA Develops an Online Media Room

Colorado PERA has developed an online "Media Room" to facilitate better communications between Colorado PERA and members of the media. It is accessed by a link directly from the home page, and is accessible throughout the public site. It provides immediate access to the latest information on Colorado PERA, including:

	News Releases and photos
	Colorado PERA's asset allocation
	Investments overview
	Legislative updates
	Board of Trustee meetings, minutes and biographies
	Membership statistics
	A variety of publications including a general Colorado PERA fact sheet, historical fact sheet, 2001 Comprehensive Annual Financial Report, Benefits at a Glance, Colorado Investment Report, Member Report, and Retiree Report
	401(k) Plan statistics

News Release (pdf)
Media Room 

Colorado PERA Board of Trustees Votes to Implement Asset/Liability Timeline

At the November 15 meeting, the Colorado Public Employees' Retirement Association (Colorado PERA) Board of Trustees approved a timeline for the implementation of the Asset/Liability study developed in conjunction with Barclays Global Investors earlier this year. The new targets and ranges are listed below.

The Board approved a recommendation to:

	Move the fixed income allocation of the portfolio to 20% (the low end of the range) by the end of January 2004.
	Have all asset classes within their target ranges by early 2005.
	Report progress made towards targets quarterly to the Board.

Asset Class Ranges

Asset Class	Policy Target	New Range
Equity	45	39–51
Int’l Equity	14	11–17
Alternatives	8	3–12
Timber	1	0–2
Real Estate	7	5–10
Fixed	25	20–30
Cash	0	0–4

News Release (pdf)

Board Action Regarding Service Purchase Costs

The Board voted at its November 15 meeting to increase the rates for service credit purchases, effective November 1, 2003, as follows:

The Board also voted to propose legislation that would limit the total amount of time a member can purchase to 10 years.  This will apply to purchases on or after November 1, 2003. This 10-year limit does not include reinstatements.

Colorado PERA Names Acting Director of Equities

Board Approves New Asset Mix

On Friday, September 20, the Colorado PERA Board of Trustees approved a new asset allocation model for the $24 billion retirement fund as follows:

New Allocation Policy
Domestic Equity International Equity Alternatives Timber Real Estate Domestic/International Bonds Cash	45% 14% 8% 1% 7% 25% 0%

This new model reflects an increased portion of the portfolio being invested in bonds to meet the fund's future liabilities. The Board directed staff to develop implementation scenarios for the new investment mix and to work with the Board's Investment Committee for approval of the time line in November of this year.

Current Allocation (as of Sept. 2002)
Domestic Equity International Equity Alternatives Timber Real Estate Domestic Bonds International Bonds Cash	45% 14% 12% 1% 11% 9% 3% 5%

Current Policy
Domestic Equity International Equity Alternatives Timber Real Estate Domestic Bonds International Bonds Cash	55% 17% 8% 2% 8% 8% 2% 0%

Colorado PERA's Mission and Vision Statements

Mission

To promote long-term financial security for our membership while maintaining the stability of the fund.

Guiding Principles:

We will deliver quality customer service, sound investment decisions, operational efficiency, educational programs, competitive plan design, and actively participate in legislative issues that affect our organization.

All activities undertaken will adhere to the guiding principles of customer focus, ethical conduct, accountability, excellence and ongoing process improvement.

Vision

To become the retirement plan of choice for all Colorado public employees.

MatchMaker 2003 Rates

At their July meeting, the Colorado PERA Board of Trustees set the following 2003 MatchMaker rates effective January 1, 2003:

2 percent of pay for State and School members 2 percent of pay for Municipal members 6 percent of pay for Judges

All Colorado PERA members--full or part-time, temporary or permanent--are eligible to receive the MatchMaker dollars if you contribute to a qualified defined contribution plan such as a 403(b), 457, or PERA's 401(k) Plan.

PERA Begins New Private Equity Investment Program

Colorado PERA announced that in July it launched a program designed to invest in smaller private equity funds under the Targeted Opportunities Program (TOP).

TOP allows PERA greater flexibility to invest in private equity funds capitalized at $250 million or less. Previously, PERA has not typically invested in these funds because the large size of its portfolio necessitated making sizeable commitments to larger funds. TOP will opportunistically target a variety of private equity investments in venture capital, leveraged buyouts and special situations. It will consider generational as well as first-time funds.

PERA will be partnering with Alignment Capital Group, a private equity advisory firm based in Austin, TX, for TOP. Alignment Capital will play an advisory role and handle the pre- and post-investment workload, including monitoring the investments and sitting on advisory boards. PERA will make all final investment decisions.

"TOP provides PERA with the ability to access very attractive investment opportunities that have traditionally fallen below our radar screen," said Kevin Kester, director of Alternative Investments. "We believe that smaller funds can exhibit many desirable characteristics including: focused strategies, hungry GP's and strong alignment interests. Quite frankly, we believe a positive dynamic exists when a fund has great deal flow and less money, which in turn forces them to be highly selective in their evaluation process."

TOP plans to invest up to $50 million per year with the expected average investment size being $10-$15 million. PERA expects to see positive returns within four or five years after the time of investment. The money for TOP will be coming out of PERA's annual allocation to Alternative Investments.

Companies with investment opportunities for TOP should contact Alignment Capital at (512) 320-4080.

PERA's Funding Status

The value of Colorado PERA's assets at the end of 2001 was $31.6 billion. While the value of assets increased over the previous year, liabilities increased more than assets during the year, creating an "unfunded" status. At the end of 2000, PERA's ratio of assets to liabilities was 105%, representing an "overfunded" status. There were only two years in PERA's history when this overfunded situation occurred - at the end of 1999 and again in 2000. The percentage of assets compared to liabilities was 98.6% at the end of 2001, which represents a very healthy funding position. Reasons for the change in assets to liabilities include a decline in the stock market and changes in assumptions (more people retired earlier than was expected). For comparison purposes, ratios of assets to liabilities for the past decade are included below:

Because Colorado PERA is a defined benefit plan, members and retirees will receive a guaranteed benefit. Those members who are planning on retiring should not be alarmed by the underfunded status of PERA. Retirement benefits will be calculated and paid in the same manner, regardless of PERA's funded status. Retirees will continue to receive their monthly PERA benefits.

PERA Hires New Fixed Income Director

Colorado PERA recently hired Bill Koski to the position of Fixed Income Director. Bringing 20 years of industry experience to PERA, Koski was most recently the head of Taxable Fixed Income Research for Charles Schwab Investment Management in San Francisco.

As the Fixed Income Director, Koski will be responsible for the management of the division's operations and staff as well as the overall management of Colorado PERA's $2.2 billion fixed income portfolio.

"The Fixed Income team is the guardian of the Fixed Income Portfolio," Koski said. "The first order of business is to make sure we are comfortable with the existing holdings in our portfolio. I am pleased to be working with an established team. Their knowledge and experience are valuable assets in this process."

Colorado PERA and WorldCom

Colorado PERA began investing in WorldCom (previously MCI) in 1993. Since then, the fund has realized a total net profit (including all losses as of June 30, 2002) of $38.5 million. Colorado PERA lost a total of $46.9 million on WorldCom investments in 2002. That loss represents less than two-tenths of 1 percent of the total portfolio of $26 billion. The fund does not currently own any WorldCom stock or bonds. 

Colorado PERA is a long-term investor and investments are highly diversified so that losses in one area of the portfolio do not critically impact the entire fund. Retirees receive guaranteed lifetime benefits and members can be confident that their retirement funds are secure.

Long Term Care Insurance Returns

The Long Term Care Program for PERA members, retirees, and their eligible family members is now open for enrollments again. The program continues to be managed by U.S. Care, and it is now insured by American Network Insurance Company, a sister company of Penn Treaty, the insurer in 2000 and 2001.

You may apply for long term care coverage at any time; there is no open enrollment period or deadline. If you apply while you are still working and an active PERA member, your application can be approved with no medical underwriting. Retirees and other family members will complete a longer application and be subject to a medical underwriting.

Long term care representatives are available to assist you via a toll-free telephone number, 1-888-PERA-LTC (1-888-737-2582). You may order an enrollment kit by calling this number, and these representatives would be pleased to help you review the long term care program and your options.

The link to U.S. Care's web site and more detailed information about the program will be available shortly. It is being updated to reflect the latest information.

Board Election Ballots Mailed

Ballots for this year’s election were mailed at the beginning of May to State and School members.

When you receive your ballot, take a moment to read the enclosed biographies of the candidates. Then, select the candidate of your choice and mail the ballot. Ballots must be postmarked by May 31. Election results will be announced in June.

If you did not receive a ballot, you may request a duplicate ballot up until May 24. Include in your request your name, address where the ballot should be sent, Social Security number, and signature.

The following are the candidates running for a Trustee seat:

School Division Candidates
Kim Natale (incumbent)
Employer: Jefferson County Schools

Mark L. Whitney
Employer: Adams County School District #50

State Division Candidates
Donna Bottenberg (incumbent)
Employer: University of Northern Colorado

F. Elizabeth Friot
Employer: Metropolitan State College of Denver

PERA Response to Denver Post Article March 1, 2002

An article in the March 1 Denver Post reported that the State is going to reduce employer contributions to PERA beginning with the March payroll.  The article is not entirely accurate.

Representatives of the Joint Budget Committee and the Governor's Office of State Planning and Budget have been working on the State’s budget “crisis” for some time.  Early last week, they approached PERA staff and indicated that they were looking at suspending State employer contributions to PERA over the next four months.

The Board discussed this development at a special meeting on February 20 and directed its staff to work with the Committee and Office of State Planning and Budget to minimize the impact of any action that might ultimately be proposed by the Joint Budget Committee.  Specifically, the Board directed its staff to work to:

• Limit any reduction in State employer contributions,

• Seek early repayment of the deferred amount with interest,

• Ensure that the State employer contribution rate return to the required level on July 1, 2002, and

• Stop further consideration of HB 1184 this legislative session.

PERA staff have followed the Board’s directives in several subsequent meetings with staff of the Joint Budget Committee and Governor’s Office of State Planning and Budget.

The Post reported that this is a done deal, and in fact, it is not.  If the process moves forward, the Joint Budget Committee will consider legislation to implement its proposed budget cuts or adjustments.  To date, no such legislation has been proposed.  Before any such cuts or adjustments could take effect, the legislation would have to pass both the House and Senate and be signed by the Governor.

The Board’s top priority is to maintain the financial integrity of the PERA fund for the exclusive benefit of PERA members.  The Board regrets that the State’s budget “crisis” may cause the State to defer a portion of its required contributions. The Board will continue its efforts to minimize the impact of any deferral of contributions.

Updates on this issue will be provided in the Retiree Report and the Member Update, both scheduled to mail later in March.

PERA and Arthur Andersen

Letter from J. Kim Natale, Board Chair, on behalf of the PERA Board of Trustees